R&D Spending Has Dramatically Surpassed Advertising Spending

Until the late 1970s, companies spent about the same amount on R&D and advertising. Today, they spend ten times more on R&D. There are several other explanations that could partly account for the findings. First, firms might increasingly rely on acquired brands instead of developing them organically. Second, firms might achieve higher mileage from advertising dollars through more intimate knowledge of their customers and by using improved tracking and analytics. An ad shown to a specific Facebook customer must achieve greater success than an ad printed in Readers Digest. Third, firms increasingly rely on peer networks, word of mouth, blogs, and cross-sold services to establish brands. And fourth, new firm founders may be more passionate about discovering new technologies than about marketing success. But it is at least plausible that marketing has lost relevance relative to engineering, technology, and product development. If that is true, it would have profound implications for organizational structures, manpower planning, and management education.